Sally and Patrick are married with 4 young children.Patrick stays at home with the kids while Sally works as CEO of a small manufacturing firm earning $105,000 annually.Sally is covered by a 401(k)plan at work,but they would like to maximize their IRA contributions as well.Which of the following are true assuming their AGI is $105,897?

Question

Quizplus · Accepted Answer

Sally can contribute $6,000 to a Roth IRA ($3,000 for herself and $3,000 for Patrick), but she cannot contribute to a deductible traditional IRA since she is covered by a 401(k) plan at work. Patrick can contribute $3,000 to a traditional deductible IRA since their AGI is within the limits for tax-deductible contributions, and he can also contribute $3,000 to a Roth IRA since Sally's income counts as earned income for the purposes of Roth IRA contributions. Therefore, the best choice is E.

Sally and Patrick Are Married with 4 Young Children